By BrandsFactory
Republican presidential candidate Donald Trump declared his decisive victory in the 2024 presidential election. This 11-month-long presidential tug-of-war has finally come to an end.
On Wednesday, the Nasdaq opened higher. Some sighed with relief, saying, “Glad I got on board.” A seller specializing in Trump-related support products candidly stated that in just half a month, their store's sales had skyrocketed, with impressive order volumes.
However, aside from the verbal sparring in TV debates, the surge in the U.S. stock market, and the "hot money" brought by Trump's personal IP, the most attention-grabbing issue is Trump's proposed tariff policy during his campaign.
"Trump has a catchphrase: 'tax', everything can be taxed," a cross-border seller joked. Can Chinese companies still do business in the U.S. during his new term?
Taxes directly affect sellers' profit margins, influencing the final pricing and competitiveness of products. Trump previously proposed two plans to impose new tariffs on U.S. imports.
The first is to impose a uniform tariff of 10% to 20% on all imported goods from all countries; the second is to impose an additional 60% to 100% tariff on imported goods from China on top of the existing tariffs.
Once tariffs are increased, it means that products carefully selected by Chinese cross-border e-commerce sellers, after crossing the ocean to finally reach the U.S., will face the "invisible mountain" of tariffs, causing costs to soar and prices to rise, potentially deterring American consumers.
Research by Trade Partnership Worldwide LLC shows that under Trump's proposal, tariffs on all categories of goods will rise significantly. In extreme cases, the overall average tariff will exceed 50%, whereas currently, most tariffs are in the single digits or low double digits.
If new tariffs are imposed, clothing items such as tops, pants, underwear, and swimwear from China will be subject to an additional 37.5%-56.0% tariff, leading to a significant price increase, estimated to rise by 12.5%-20.6%.
Renowned economist and member of the Ministry of Industry and Information Technology's Information and Communication Economics Expert Committee, Pan Helin, believes that Chinese cross-border e-commerce and brand exports may suffer in the short term due to the tax issue.
Trump's initial intention was to offset the deficit caused by domestic tax cuts by increasing tariffs. During his previous term, he introduced the "Border Adjustment Tax," which imposed an additional 10% tariff on imported goods worth $2.7 trillion annually at that time.
However, multiple studies have shown that the previous round of tariff increases directly led to higher prices for American goods, causing American consumers to bear the brunt of these price hikes, thereby affecting their purchasing power.
On one hand, the increased tariffs resulted in high costs that American retailers found difficult to fully absorb, leading to higher prices for end consumers. Some consumers might reduce their purchases or be forced to buy the same goods at higher prices. This additional expenditure could result in American consumers losing $46-78 billion in purchasing power annually.
Due to these tariffs, consumer demand for clothing is expected to decrease by 22%-33%, reducing annual clothing purchases by $13.9-24 billion. The increase in clothing costs particularly affects low-income families, as their spending on clothing is three times that of high-income families.
In the toy sector, China accounted for 77% of the total toy imports to the U.S. in 2023, which is 25 times that of the second-largest supplier, Mexico. If toy prices rise due to tariffs, American consumers' spending on toys will decrease by $8.8-14.2 billion.
The same applies to furniture, household appliances, footwear, and travel goods. It is estimated that American consumers' spending power on these categories will decrease by $8.5-13.1 billion, $6.4-10.8 billion, $6.4-10.7 billion, and $2.2-3.9 billion, respectively.
On the other hand, according to the General Administration of Customs, China remained the second-largest source of imports for the U.S. in 2023. From January to August 2024, China's exports to the U.S. reached nearly 3 trillion yuan, accounting for about 18% of China's total exports, once again making the U.S. China's largest export market.
Therefore, if Trump quickly imposes a 60% or higher tariff on all goods imported from China should he return to office, the U.S. will find it difficult to find enough substitutes for key goods imported from China in the short term, even if only part of the tariff costs are passed on to American consumers.
Optimists believe that Trump's return to office would be detrimental to cross-border trade but beneficial to China-Europe and Belt and Road initiatives. Additionally, Trump himself is a businessman, and "when a businessman takes office, business interests come first, and tariffs are just a bargaining chip," analyzed a cross-border seller.
Of course, only by "taking action" can cross-border enterprises alleviate their anxiety at present.
At the end of October, an investor sought help in a group chat, stating that with the tightening of tariff policies, they hoped to find factory site resources in the United States in advance for their invested RV and electric motorcycle companies. "They are all within about ten thousand square meters, close to Los Angeles. I wonder if any fellow compatriots have factory resources to recommend."
Facing the pressure of high tariffs, some cross-border e-commerce companies are considering adjusting their supply chain layout, choosing to move their production bases to countries or regions with lower tariffs, such as Southeast Asia and Latin America. "The cost in the Philippines is high, and management is difficult; Vietnam has already been 'targeted'. We recommend going to Cambodia, Malaysia, or Thailand (to build factories)."
The United States is an important destination for Chinese cross-border e-commerce sellers going abroad and is also one of the key markets for cross-border e-commerce platforms such as Temu, TikTok Shop, and SHEIN. Some sellers are not too concerned about Trump's "return to power". "China is the world's factory. The richness and cost-effectiveness of Chinese goods are irreplaceable, at least in the short term. Adding tariffs can only be said to be the Americans' own doing."
